Charter Space snags $5M seed to insure the new space economy

Space companies have long had a problem: when they go looking for insurance, traditional carriers often don't know what to make of them. As Charter Space puts it on its website, regular insurers 'heard a bunch of scary science words and freaked out.' The El Segundo, California-based startup is trying to change that with a data-driven approach to underwriting, and it just got a $5 million seed round to expand.

Crystal Venture Partners, an insurance-focused investor, led the round. Fintech investors QED and Blank Ventures, early-stage firm Hustle Fund, and Gaingels also participated. Charter Space said it will use the proceeds to grow its sales organization and its insurance offerings, with potential products including coverage for 'novel mission concepts' such as space-based nuclear power, lunar missions, and in-space servicing of other spacecraft. The company has raised $8 million to date.

Charter Space was a finalist in last year's TechCrunch Startup Battlefield. It said it is already servicing more than 50 companies across the U.S. space and defense industrial base, following the launch of its nationally licensed insurance brokerage in May.

Founder and CEO Yuk Chi Chan started the company with co-founder Yukun Yin. Their original plan was to build centralized software for aerospace engineering that would bring together technical, manufacturing, and test data for customers. But Chan realized that data could be valuable in the underwriting process. That insight is at the core of Charter Space's pitch: use engineering data to make space risks understandable and insurable.

Chan has argued that broader insurance coverage would make the entire space industry safer. 'We want more satellites to get insured, because that means that everything as a whole is much, much safer,' he told TechCrunch last year. He also framed insurance as a way to diversify space funding beyond venture capital, bringing in debt, credit, and other capital sources.

The market context helps explain the opportunity. Space companies historically had few financial services options because the industry was dominated by governments and defense contractors that moved slowly and conservatively after the Cold War. The boom of new space companies over the last decade, spurred largely by SpaceX's Falcon 9 lowering the cost of launch, has created enough demand for companies like Charter Space to grow. New satellite and spaceship makers are emerging, and launch providers are competing to fill the void SpaceX will leave when it retires the Falcon 9.

Investors see insurance as critical infrastructure for the commercial space economy. Jonathan Crystal, managing partner of Crystal Venture Partners, said in a statement that Charter Space 'sits at the intersection of two enormous opportunities' — the growth of the commercial space economy and the need for a modern approach to understanding and insuring increasingly complex risks. Michael Yaworsky, Florida's commissioner of insurance regulation, called insurance 'the precondition for growth in space,' adding that the state that leads on insurance will become the destination for capital investing in future industries.